Blockchain technology is disrupting the logistics industry in areas such as transparency and efficient tracking of goods and processes.

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Communication flow and logistics is an essential aspect of human existence which forms the backbone of the transfer of goods, services and value.

As international trade and logistics continues to expand, more efficient methods are being developed to enable effective service delivery and value transfer. However, Blockchain technology is bringing another dimension to disrupt the logistics industry in areas such as transparency and efficient tracking.

A globally significant industry

John Monarch, CEO at Shipchain, notes that the logistics sector employs the most people in the world. He explains that as this sector expanded over millennia, it has required innovation to scale and sustain practicality for the growing human population. This is happening again at the time of writing, with the fourth industrial revolution.

Monarch tells Cointelegraph:

“Connected devices revolving around the Internet of Everything (IoE) need a higher level of security. Blockchain technology is a matchless solution in this regard because it provides the best protection through distributed ledgers, advanced encryption, smart-contracts and reduced intermediaries. As a result, this will tackle corruption, ransomware, theft, premium-fees and tracking issues.”

He concludes that once Blockchain networks begin taking their first steps on a mass-market level, they will save the international trade industry at least $50 billion per year. And upon maturity, Blockchain technology could save the logistics industry a whopping $500 billion annually.

The actual role of Blockchain

Blockchain professional Aleksandar Matanovic tells Cointelegraph that Blockchain technology will indeed work as a tool to improve processes by bringing inherent properties into the industry.

Matanovic says:

“As in many other industries, I don't see Blockchain as a tool to increase efficiency, there are much more efficient systems than Blockchain-based ones. I see it as a way to make systems more transparent, more robust and less dependent on intermediaries.”

The importance of effective tracking

The COO of BitLand, Christopher Bates, explains that one of the main issues with chain of custody is knowing when property changes ownership or custodianship. Bates uses a car’s history as an example:

“It is pretty important to know if a car has been in a major accident and has frame/structural damage, he says. “If there was an immutable accessible record that kept track of the car history, there would be no way a car salesman could sell a car that had been extremely damaged.”

Bates also explains that ownership of land has many problems affecting it around the world. One of the most consistent problems is when a parcel of land is double or triple sold, meaning a person will sell land to multiple people with only one of the sales (if any) actually being legitimate. In some places, land titles are kept on paper or are tracked by only a single individual. In these cases, it’s often impossible to truly know the proper chain of custody, and individuals manipulate ownership records for personal gain.

Blockchain will enable accountability

Given that shipping anything is a sequence of custody handovers, having an immutable record of chain of custody transaction makes it impossible to lose track of who is responsible for a piece of property during each handover. Existing courier services often track packages along their route, but such methods are imperfect. Bates says:

“The issue therein is that since they are mutable, shipment records can be hidden or erased completely to the detriment of the people at large. Governments are able to hide their black budget spending by erasing shipping records or preventing records from being issued at all. On the one hand, governments will argue this is for national security, but on the other hand, the taxpayers that are sponsoring these budgets deserve transparency in spending.”

Blockchain technology combines chain of custody control with the transparency of immutable record-keeping. This creates an ecosystem that deters malicious actors, as they will eventually become known due to system transparency.

Bates concludes by noting that anyone who claims to be in the decentralization movement should be extremely happy any time a government decides to implement Blockchain tech of any sort. It means that government is moving towards transparency whether they know it or not.